US Coal: Keeping the Lights On…In Chinese Boardrooms?

Posted by JW Randolph | July 25, 2012 at 11:57 am


As American Coal Exports Skyrocket, Chinese Companies Look To Buy Up Appalachia

Much of the financial infrastructure for companies operating Appalachian surface mines may soon be in China, along with an increasing amount of Appalachian coal.

On May 7, Guizhou Guochuang Energy Holding Group said it had raised 3.9 billion yuan in a private placement to be used mainly to acquire and develop Triple H Coal Company, making it the first Chinese company to invest in coal in America…

I want to put this into a context for other Tennesseans. The United States exports ten times as much coal as we mine every year in Tennessee. We don’t need to continue mining mountaintops in our state to provide infrastructure, jobs, or electricity. What’s more, Tennessee congregations, citizens, and campuses are working together to make Tennessee the first state to ban mountaintop removal by passing the Tennessee Scenic Vistas Protection Act in the state legislature. The bill would ban surface mines on virgin ridges above 2000 feet in the state.

Meanwhile, Triple H Coal – the company which looks to be in Chinese hands soon – is the only remaining Tennessee-owned company with active surface mining permits above 2,000 feet. In other words, assuming the deal to buy out Triple H is finalized, if Tennessee politicians talk about opposing the scenic vistas bill, they are talking about protecting companies that are leaving their pollution in Tennessee, but are sending most of the benefits (both mineral and financial) either out of state, or out of the country.

Tennessee coal makes up less than 1% of TVA’s coal purchases. Most coal from the Volunteer State is shipped by rail to South Carolina and Georgia. Unfortunately for Appalachian citizens, in the near future much of the financial infrastructure associated with nearby coal operations may no longer be locally invested either. It certainly doesn’t sound like these Chinese investors plan to stop with Triple H either…

A top Shenhua executive said that coal mines in Tennessee were attracting a lot of attention from investors.

The article notes that Triple H coal has surface and mineral rights for about 125 square kilometers (roughly 48 square miles) in Campbell County, Tennessee. If the acquisition is finalized, the company apparently has plans to build five new metallurgical coal mines with 1 million tons of capacity. Metallurgical coal, high quality coal used for making steel, is more valuable on the international market and more likely to be exported than the steam coal typically used in coal fired power plants.

To be clear, the main consumers of Appalachian mountaintop removal coal are in the southeastern U.S., particularly North Carolina, South Carolina, and Georgia. However, as prices spike and companies switch to natural gas, purchased power, energy efficiency, and cleaner renewables, an increasing amount of mountaintop removal coal is going overseas. So from a profit perspective, it’s no surprise to see foreign companies continue investing in Central Appalachian coal companies that are practicing mountaintop removal. But from a people perspective, it is just another kick in the gut to an already burdened Appalachian people.

Interest in rapidly rising American coal exports, is growing after a report from Representative Ed Markey (D-MA) and his staff on the US House Committee on Natural Resources showed that around 12% of America’s coal was exported in 2011. That rate has been rising for several years. From the four states included in the report (WV, VA, PA, KY), more than 13 million tons were exported, with some surface mines in Appalachia exporting 100% of their coal production. The 13 million tons exported from Appalachia is almost double the annual surface production of the state of Virginia, a state where at least 3 mines exported 100% of their coal production in 2011.

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